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3. Fabrication Yards
Productivity compared to baseline location Estimating\Construction
Labour Rates compared to baseline location Estimating\Construction
4. Offshore Transportation & Installation – Execution plan and Costs
Mobilization and demobilization basis of marine construction vessels and points of origin for pre-fabricated facilities (pipelines, platforms, PLEMS)
Project Manager / Construction Support.
Construction / Transportation spreads identified as required for the work and Day rate costs thereof.
Estimator / Construction Support Mob and demob, logistical and preparatory costs associated with identi-
fied spreads to be mobilized and overall execution plan and basis.
Estimator / Construction Support. Duration assessment for identified marine spreads including non-working
periods
Estimator / Construction Support. Assessment of Construction Management and construction support engi-
neering costs and durations
Estimator / Construction Support
5. Services Estimate All
Engineering job hours, other direct costs. Engineering
Department Estimate of hours and other direct costs. Department Managers
Total cost of EPCM Services. Team/Estimating
7. Escalation Analysis
Escalation rates Project Owner (client)
Instructions and information to the estimating team concerning operations policy on escalation rates, indexes and projections.
Project Owner (client)
8. Contingency Analysis
Development of estimate and the best measure of potential variance in project costs. (Risk Analysis)
Project Team / Client
Final estimate figure. Project Management
9. Estimate Reviews
Engineering Review (Quantity/Scope)
The Quantity Review meeting is held to ensure the estimate detail has been completely and correctly quantified for all direct account categories according to the scope document. This meeting is a team review of scope and quantity details for each account, and it is a key review of t he direct account quantities where agreement on the total package must be reached among all attendees.
The estimate detail sheets that are to be reviewed must be issued to engineering at least two working days before the meeting, to provide sufficient time for independent reviews.
WorleyParsons In-House review – (offshore Transport and Installation programs)
A WorleyParsons in house review meeting shall be held to ensure all elements of the estimate has been cor- rectly applied and quantified. Particular emphasis with appropriate test shall be directed towards:-
• Scope and quantity and their surrounding basis and principles which drive project scope and quantity.,
• Assumptions / principles adopted as part of the estimate basis and the test of reasonableness against these
assumptions. (e.g. Point of mobilization of Marine Spreads, Vessel selections, Construction methods as- sumed).
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5.3 ESTIMATE REVIEWS
The principle purpose of the estimate review is to present information about the estimate and the project that allows the reviewer to evaluate that the estimate is of sufficient quality to meet its intended purpose. WorleyParsons developed methods for the process of reviewing estimates and vali- dating capital cost estimates that are prepared by ourselves and by others.
A formal estimate review proc- ess ensures quality, accuracy; completeness and consistency and is usually comprised of a series of reviews:
• Engineering Review
• Project Team Review
• Cold Eyes PEER Review
• Management Review
The estimator should ensure the estimate is well docu- mented, consistent, reliable and fit-for-purpose before releasing it for review. As a minimum, the Estimate Pack- age should contain the follow-
ing supporting documents:
• Basis Of Estimate • Estimating Summaries - by WBS and by CoA • Estimate Detail • Estimating Benchmarking Report • Estimating Reconciliation Report • Estimating Back-up
Basis of Estimate (BOE) The estimate review team will review the estimate for QC (screening for errors) and QA (validate whether the estimate is developed following our standard procedures and guidelines).
The Basis of Estimate (BOE) may be the single most impor- tant document in the estimat- ing package.
Besides documenting the re- quirements for all estimate stakeholders, the BOE is also the guide for all communica- tion and reviews; it acts as a bridge to cost control and change management; and is
the key to historical knowledge of what’s behind the estimated numbers.
The BOE document should include:
> Purpose of the Estimate
> Scope description
> Estimate exceptions
> Estimate exclusions
> Assumptions & Allowances
> Pricing > Execution/Contract Strategy > Escalation > Risk Analysis/Contingency > Benchmarking > Reference documents Engineering/Design Review The purpose of this review is to validate whether the esti- mate represents the projects scope, verify the complete- ness of the engineering deliv- erables used for the estimate and confirm whether the take offs (MTOs) reflect those de- liverables.
The estimate review team should include core members of the engineering team and estimating teams.
Project Team Review After passing previous re-
views, the estimate is ready for review by the project team. The project team must fully understand how the estimate is prepared in order to present and defend the estimate to their management and the client.
Cold Eyes PEER Review When developing an estimate, it is not uncommon that the project will develop an optimis- tic view about uncertainties concerning scope and process issues.
This optimism could be the result of inexperience of the estimating-team; it could be driven by client expectations on what the “right number” should be or even by our own corpo- rate management in its ambi- tion to secure the project. To ensure that WorleyParsons is adequately protected against financial or reputational risks, it is mandated that every TIC estimate will have to be exam- ined via a so-called “cold eyes” Peer review before it is in re- leased to the clients.
This review is typically done by a senior or Lead estimator who possesses the appropriate ex- perience & skills and is familiar with our procedures and work- flows, but who is alien to the project.
The purpose of the “Cold Eyes” review is to examine the esti- mating processes and project data carefully and present the findings and amendments to the project stakeholders, in order to achieve the right bal- ance between a realistic esti- mate and the companies com-
mercial interests..
Client Presentation & Review This final step in the cost esti- mate development and submit- tal includes a formal presenta- tion of the estimate package by the Project Manager to the cli- ent. The presentation seeks to obtain final client approval of the estimate submission.
5.4 BENCHMARKING
Estimate benchmarking is the process of comparing one's processes and performance metrics to other bests and/or best practices from earlier com- pleted projects (and estimates). Dimensions typically measured are quality, time and cost. Measurement is done using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance.
These metrics can be utilized for estimate development (conceptual estimates) and for comparison to other estimates. The term benchmarking was first used by cobblers to meas- ure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes.
Benchmarking is one of the main drivers behind the devel- opment and implementation of standard cost elements (CoAs) on projects.
The global Codes of Account enables WorleyParsons to col- lect actual costs in a historical cost database in a consistent manor across the globe. The purpose of this review is to
ensure that the estimate is aligned with the schedule (escalation impacts); examine in-directs and other home office costs; verify constructability and start-up/commissioning costs. It usually also involves some reconciliation to estimates gen- erates in earlier project phases, so the differences can be clearly explained.
Corporate Management Re- view
The number of management reviews and level they are pre- sented to will vary with the stra- tegic importance and/or total value of the project.
A management review is held at a high level of analysis and will focus on substantiating overall adequacy of the esti- mate with regards to its in- tended use.
Areas that are typically cov- ered:
• Estimate reconciliation (“how
does this estimate compare to the last estimate?”)
• Estimate validation (“how
confident are in terms of the presented numbers?”)
• Cost Risk assessment (“what
are the cost risk drivers and how are these risk miti- gated?”)
• Project Alternatives (“have
we considered alternative design/cost options; what was the decision process leading to the adopting the selected options”?)